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Crude Oil Rises a Second Day as OPEC Prepares to Cut Production

By Grant Smith

Oct. 20 (Bloomberg) -- Crude oil rose for a second day on speculation OPEC will cut production to halt a 50 percent slide in prices from July's record.

OPEC, supplier of about 40 percent of the world's oil, may pare output by 2 million barrels a day in stages to stabilize prices, said Chakib Khelil, the group's president. Deutsche Bank AG cut its 2009 crude oil price estimate by 35 percent to $60 a barrel, citing the possibility of a ``major world recession.''

``OPEC are going to step in and try to protect their price,'' Robert Laughlin, senior broker at MF Global Ltd. in London, said in a television interview. ``They have to do a million -- anything less and it might backfire against them.''

Crude oil for November delivery gained as much as $2.15, or 3 percent, to $74 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $73.19 at 9:30 a.m. in London.

Oil dropped to a 14-month low of $68.57 a barrel on Oct. 16. Options contracts to sell oil at $50 by December soared 28- fold in the past two weeks on the New York Mercantile Exchange.

Contracts that allow holders to sell 1,000 barrels of oil for $50 each by December closed at $280 on the Nymex on Oct. 17, up from $10 on Oct. 3.

China's economy grew 9 percent in the third quarter, the slowest pace in five years, underscoring concern that the spreading financial crisis threatens the biggest contributor to global growth.

`Significant Cut'

The Organization of Petroleum Exporting Countries brought forward to Oct. 24 a Vienna meeting planned for November to discuss output levels.

While there is a consensus among the group's members to cut output, there's no agreement on the size of the reduction, and that could range between 1 million and 2 million barrels a day, Khelil, the group's president said in an interview on Algerian television yesterday.

``A one to 2 million barrel cutback is quite likely,'' Tom James, an independent commodity trading adviser, said in a Bloomberg Television interview. ``It's important we do hold around $60 to $70. If we see $50 or below for many, many months, this is going to hurt investment in the industry.''

OPEC's 13 members produced 32.2 million barrels a day in September, according to a survey of analysts and producers.

Brent crude oil for December settlement rose as much as $1.97, or 2.8 percent, to $71.57 a barrel on London's ICE Futures Europe exchange, and traded at $70.42 at 9:31 a.m. London time.

OPEC Risks Split Over Oil Cuts as Economies Reel, Prices Drop

By Grant Smith and Margot Habiby

Oct. 22 (Bloomberg) -- OPEC, founded five decades ago to unify oil producers, risks dividing members as the group plans to cut output and raise prices just as developed nations face their worst recession since 1983.

Iran's energy minister, Gholamhossein Nozari, said yesterday OPEC may slash output quotas by 2.5 million barrels a day, or 8.7 percent, an amount about equal to what's pumped from Kuwait. The Algerian minister and OPEC president, Chakib Khelil, said two days earlier the reduction may be only 1 million barrels.

The debate in the Organization of Petroleum Exporting Countries pits Saudi Arabia, the group's biggest producer and a U.S. ally, against Venezuela and Iran, two nations that oppose U.S. foreign policy and advocate higher oil costs. Crude plunged 52 percent to $70.89 yesterday from its July 11 record of $147.27 on the New York Mercantile Exchange.

``The divisions arise in OPEC because what countries need and want varies,'' said Gareth Lewis-Davies, an oil analyst at Dresdner Kleinwort Group Ltd. in London. ``The Saudis are playing a long-term political game. Other countries have higher costs.''

Saudi Arabia needs oil prices of less than $30 a barrel to balance its government budget, according to Merrill Lynch & Co. estimates. The United Arab Emirates requires $40 a barrel and Qatar $55.

Iran, with double the population of Saudi Arabia, has a breakeven point of about $100 a barrel, according to Edward Morse, managing director and chief economist at Louis Capital Markets LP in New York. In Venezuela, where President Hugo Chavez's government is spending oil revenue on social programs, the figure is about $120, he said.

Below $50

Oil options trading shows the probability that crude will fall below $50 a barrel by June has more than doubled in 10 days, Deutsche Bank AG said in an Oct. 17 report. There is a 9 percent likelihood that June 2009 crude oil contracts will expire below $50, up from 4 percent, Deutsche said.

The world's industrialized economies will expand next year at the slowest pace since 1982, the International Monetary Fund said Oct. 8. Growth will weaken to 0.5 percent in 2009, from 1.5 percent this year, sending U.S. unemployment to its highest level in 16 years, the agency said.

Oil demand may fall for the first time in 15 years this year as the worst financial crisis in decades tips economies into recession, according to the Centre for Global Energy Studies, a London-based consulting company.

Different Agendas

``OPEC members have completely different agendas,'' Merrill Lynch analysts led by Francisco Blanch said in an Oct. 20 report. ``History shows that it is difficult to maintain discipline in a falling price environment, and OPEC cohesion has already started to decline.''

Eleven years ago, OPEC members bickered about output quotas as oil slid 28 percent in 10 months amid the onset of the Asian financial crisis. At a meeting in Jakarta in November 1997, they raised quotas, ignoring the turmoil that slowed Asian economies and cut oil demand. Prices fell another 44 percent by December 1998 to below $11 a barrel.

``OPEC members are worried that they will be slow to react and oil prices will drop to $50 or $40 a barrel,'' said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts.

After the late 1990s price drop, Saudi Arabia, Venezuela and non-OPEC nation Mexico led efforts to cut production to boost prices.

``The death of OPEC typically comes up as a question or a theme at times when prices are falling dramatically,'' said Tim Evans, an energy analyst at Citi Futures Perspective in New York. ``It is exactly at those moments when the OPEC membership tends to recognize that they need to come up with a combined response to the market.''

`Consensus to Reduce'

Algeria's Khelil said ``there is a consensus to reduce production, but there is no agreement on how much to cut'' on Algerian television Oct. 19.

Saudi Arabia, where officials haven't made any comments before this week's meeting, is likely to resist a cut of more than 1 million barrels because it's conscious of the political response in the U.S. and other consuming countries, said John Sfakianakis, chief economist at Saudi British Bank in Riyadh.

``I don't think we will see a 2 million-barrel cut, given the reaction that this will have both by the market and by the politicians,'' Sfakianakis said in a phone interview.

Saudi King Abdullah said at a June 22 oil summit in Jeddah that the world's largest oil-exporting nation seeks ``reasonable'' prices to producers and consumers.

`Absolutely Scandalous'

U.K. Prime Minister Gordon Brown said last week that it was ``absolutely scandalous'' that OPEC is considering cuts as the global economy risks falling into a recession.

At OPEC's last meeting in September, the group's members agreed to adhere more strictly to production quotas, trimming output by about 500,000 barrels a day.

Saudi Arabia produced 9.45 million barrels a day in September, according to Bloomberg estimates. Its output target is set at 8.94 million barrels. Iran, OPEC's second-largest producer, trimmed production by 130,000 barrels to 3.95 million barrels day, close to its quota of 3.82 million barrels, according to Bloomberg estimates.

Saudi Arabia will probably forge a compromise for production cuts to be taken over coming months instead of all at one time, analysts said.

``Everyone recognizes that oil needs to be taken off the market,'' Morse said in a phone interview. ``If they cut a million, they will almost certainly have to go in for a second round of cuts.''

OPEC members will meet again in Algeria in December.

I don't agree with some of these statistics.

Iran set its budget based on $45 pb rather than $100. Where do they get 100???????

It says a breakeven point of $100.

Cost of oil production in that region is from $8 up to a macimum of $20, not $100.

Maybe the $100 takes into account investment required or already put in place in replacing reserves, production technologies etc?

Lifting cost is not the whole cost is it.

Humm,

You are saying the cost of any new production is above $100. So the prie fall results in loss for those countries invested in oil. Thos who plan to invest, like USA will stop doing so. The mid east countries will dominate the market again.
Is that right?

Oil Falls to 16-Month Low, Gasoline Tumbles, as Demand Declines

By Mark Shenk

Oct. 22 (Bloomberg) -- Crude oil fell more than $5 a barrel to a 16-month low and gasoline tumbled as weakening fuel consumption outweighed prospects of a production cut by OPEC at a meeting this week.

U.S. fuel demand during the past four weeks was down 8.5 percent from a year ago, an Energy Department report today showed. The financial crisis that's curbed the nation's energy use is spreading to emerging markets. OPEC will decide on Oct. 24 to lower output by at least 1 million barrels a day, according to a Bloomberg News survey.

``The market is more concerned about the economy than anything else,'' said Tom Bentz, senior energy analyst at BNP Paribas in New York. ``Until there is a recovery of the financial system and the economic picture, oil will trend lower, even if OPEC makes a cut of 1 million barrels plus.''

Crude oil for December delivery declined $5.07, or 7 percent, to $67.11 a barrel at 12:55 p.m. on the New York Mercantile Exchange. Futures touched $66.83, the lowest since June 14, 2007. Prices, which have tumbled 54 percent since reaching a record $147.27 on July 11, are down 23 percent from a year ago.

Gasoline for November delivery declined 12.94 cents, or 7.7 percent, to $1.5625 a gallon in New York. Futures touched $1.5588, the lowest since February 2007.

Pump prices are following futures lower. Regular gasoline, averaged nationwide, declined 3.1 cents to $2.858 a gallon, AAA, the nation's largest motorist organization, said today on its Web site. Pump prices have tumbled 31 percent from the record $4.114 a gallon reached on July 17.

Emerging Markets

Argentina's planned seizure of $29 billion of private pension funds stoked concern the nation is heading for its second default in a decade. President Cristina Fernandez de Kirchner's decision hurt markets already reeling from slumping commodity prices and slower growth.

China's gross domestic product increased 9 percent in the third quarter from a year earlier, the weakest pace in five years, as the slowdown in the U.S. and other markets saps demand for Chinese products. China is the world's biggest oil consumer, after the U.S.

``I think the economic news from Asia is knocking the last leg from under the bulls,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``We're now getting evidence that China isn't immune to the financial crisis after all.''

Energy prices also fell because the euro sank to an almost two-year low against the dollar as stock markets declined around the world. The euro dropped 1.6 percent to $1.2848 from $1.3063 yesterday, after touching $1.2743, the lowest since Nov. 7, 2006.

U.S. Fuel Consumption

Fuel demand in the U.S. averaged about 18.7 million barrels a day during the four weeks ended Oct. 17, according to today's Energy Department report. Consumption in the four weeks ended Oct. 10 was the lowest since June 1999.

``The projections of a deep economic slowdown are scary,'' said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. ``Demand for every segment of the oil barrel is going to take a hit.''

U.S. gasoline demand averaged 8.8 million barrels a day over the past four weeks, down 4.3 percent from the same period last year, the report showed. Consumption of distillate fuel, a category that includes heating oil and diesel, averaged 3.9 million barrels a day, down 5.8 percent.

``The industrial slowdown will reduce use of diesel, people will cut back on discretionary driving, hitting gasoline demand, there will be less travel, hitting jet fuel demand, and there will be less shipping, which hits bunker-fuel demand,'' Mueller said.

Inventories

Crude oil inventories rose 3.18 million barrels to 311.4 million barrels, the report showed. It was the fourth-straight increase. A gain of 2.65 million barrels was forecast, according to the median of responses by analysts in a Bloomberg News survey.

The Organization of Petroleum Exporting Countries may disregard pleas from oil-consuming nations on the brink of recession and cut output this week, a Bloomberg survey showed.

Thirty of 33 analysts surveyed this week forecast that OPEC will lower production by 1 million barrels a day or more at the meeting in Vienna, which was brought forward from November. That's more oil than Australia consumes. OPEC also may signal plans for an additional reduction of at least 500,000 barrels a day by early 2009.

Brent crude oil for December settlement fell $4.73, or 6.8 percent, to $64.99 a barrel on London's ICE Futures Europe exchange. Futures touched $64.76, the lowest since May 9, 2007.

Negative ramifications of downward spiral could be considerable for oil sands and Canadian economy as a whole
NORVAL SCOTT

With files from Kevin Carmichael in Ottawa, David Parkinson and The Canadian Press

October 23, 2008

CALGARY -- The threat of a deeper recession triggered by the global financial crisis has pushed oil prices to a low not seen for 16 months, destabilizing the economics of new energy projects around the world.

Crude prices fell $5.43 (U.S.) to $66.75 a barrel yesterday - the lowest price since June 13, 2007 - after the U.S. Energy Information Administration said its oil reserves rose by 3.2 million barrels last week, well above industry expectations. The figures indicate slumping demand in the U.S., the world's largest oil consumer.

The pricing fall comes even though the Organization of Petroleum Exporting Countries will likely cut production at an emergency meeting on Friday. OPEC is expected cut its output by as much as two million barrels a day, a huge amount in historical terms, but the market doubts whether even a reduction of that magnitude would shore up sentiment.

"The worry is that what we're seeing in the U.S. will take place in the rest of the world too," said Bart Melek, senior economist with BMO Nesbitt Burns. "OPEC will no doubt respond, but it'll take some time for its cuts to have any impact."


If oil prices remain at these levels, planned projects around the world, including some in Alberta's oil sands, may be in jeopardy. Many newer developments in hard to reach areas are based on prices of at least $70 a barrel.'

These include projects in deep sea waters and the Arctic and, in many cases, are based on even higher oil prices.

Already, several Canadian companies including Nexen Inc., OPTI Canada Inc. and BA Energy Inc., have delayed or postponed the construction of new upgraders in the oil sands, reasoning that the projects are too expensive to proceed in the current environment.

Other projects, including Petro-Canada's $25-billion (Canadian) Fort Hills development, are also believed to be at risk. Analysts believe a long-term oil price of somewhere between $85 (U.S.) and $100 a barrel is needed to justify building an oil sands development including an upgrader now.

For the Canadian economy, the impact of the fall could be considerable. The commodity boom has helped offset the effects of weaker demand for Canada's manufactured goods by creating a windfall of wealth from its exports of oil and farm products. But the current decline in oil prices will reduce corporate profits and put strains on government coffers that swelled as the cost of crude surged to its peak of $147 a barrel in July.

The drop in the value of the loonie, which is tied to the price of oil, will also make imports more expensive, threatening to raise the cost of consumer goods when Canada is already in the midst of its weakest economic growth in 17 years.

But some argue that the fundamentals that drove oil to $147 - strong demand for crude from Asia, combined with an increasing scarcity of easy-to-develop crude - aren't about to disappear. Some analysts believe oil will find a floor at around its current levels, unless the global economy enters total meltdown.

"Is this [price] here to stay? Definitely not," said Martin King, a Calgary-based analyst for FirstEnergy Capital Corp. "OPEC will act to some degree, and the supply side is not going to be able to keep up. There's no bailout coming from non-OPEC production, and a [price rise] will come in a matter of months, not years."

Still, demand for gasoline in the U.S. is now down some 4 per cent from the same time in 2007, as consumers cut back on spending, leading to higher inventories and lower prices.

For Canadian companies, sluggish growth in global demand likely means a slowdown as new projects are pushed back, Mr. King said, adding that there could also be widespread layoffs.

Husky Energy Inc. chief executive John Lau said large oil companies with strong balance sheets will continue to develop oil sands projects, but smaller players may suffer.

"I'm quite sure major developers with deep pockets will continue to focus on oil sands development," Mr. Lau said. "Oil sands developments are very special projects. [But] in view of the high costs and also labour shortage, most of the of the small projects are facing a lot of challenges."

Oct. 23 (Bloomberg) -- Crude oil rose from a 16-month low as OPEC's president said that members had reached a consensus on the need to trim production and Iran said the cut may be as much as 2 million barrels a day.

There's no agreement on how big the reduction needs to be, the group's president, Chakib Khelil, told reporters in Vienna, where OPEC ministers arrived before a meeting tomorrow. Iranian Oil Minister Gholamhossein Nozari said OPEC must ``balance'' the market, after prices tumbled 54 percent from a record in July.

``If OPEC makes a cut of 1 to 2 million barrels tomorrow, prices should firm up and move higher in the short term,'' said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut. ``Unless there is something huge announced, the market will eventually start moving lower again because of the weak economy.''

Crude oil for December delivery rose $1.06, or 1.6 percent, to $67.81 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures touched $65.90, the lowest since June 13, 2007. Prices are down 21 percent from a year ago.

``Prices have fallen a great deal, so a gain should be expected,'' said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut.

Oil producers to slash output
11 hours ago

Oil cartel Opec has agreed to cut production in a move that is likely to halt the recent slide in UK petrol prices.

Members of the organisation decided to cut output by 1.5 million barrels a day from next month in an attempt to shore up sagging prices.

Explaining the reasons for the move, a statement read at the end of the meeting in Vienna said prices had witnessed a dramatic collapse unprecedented in speed and magnitude.

Crude oil has tumbled to less than 70 US dollars a barrel amid global recession fears - less than half the 147 dollar high seen in July.

That has led to falling petrol prices at UK forecourts. Supermarket giants Asda, Tesco and Sainsbury all announced a new round of cuts.

The retailers joined oil firm Total in slashing 3p off a litre of unleaded to take the price down to 94.9p. Morrisons is also cutting petrol costs.

The last time petrol was 94.9p at Asda was last October, and the supermarket said the announcement marked the third time it had cut its petrol prices in a fortnight.

But the decision by Opec ministers failed to halt the slide in oil prices on Friday. Light, sweet crude on the New York Mercantile Exchange - the benchmark price - was at 64.51 US dollars, a drop of more than three US dollars in the session as global recession fears continued to depress world markets.

Oil prices had edged up from their 16-month low below 67 dollars a barrel to around 69 dollars ahead of Friday's meeting.

Motoring body the Automobile Association (AA) welcomed the latest price cuts, but warned that moves by Opec to slash production meant that the recent easing in petrol price could be brought to an end.

Drivers face rise in price of petrol
Motorists have been warned that the price of petrol could rise by up to 5 pence a litre after members of the OPEC oil cartel threatened to cut production.

By David Millward, Transport Editor
Last Updated: 12:44AM BST 24 Oct 2008

Russia is likely to join with OPEC in restricting supply in an attempt to drive up the cost of oil. This will lead to a rise in petrol prices just weeks after drivers finally began to see costs on the forecourt come down.

Over the last month motorists have benefited from the slump in world oil prices, following pressure from Gordon Brown on retailers to pass on savings to their customers.

But analysts now believe the end is in sight for drivers' recent honeymoon which has seen the cost of unleaded drop to less than a pound a litre .

OPEC production is almost certain to be reduced at the cartel's emergency meeting in Vienna today (Fri). As a result even the most conservative analysts expect a rise of $10 a barrel.

A two dollar increase in the price of petrol adds roughly a penny to the pump price, so motorists could face a five pence a litre rise by Christmas, experts have warned.

The rise - equivalent to another 22.5p on a gallon of petrol - means filling up an average family car, such as a Vauxhall Astra, will cost around 2.50 more at 50.

An AA spokesman said: "Our fear is that they will cut production to either hold prices where they are or start pushing them up.

"If prices do go up then people will be travelling less and have less disposable income for things like Christmas presents for their children.

"But the oil market is hostage to a number of things from political instability, the failure of a refinery or a natural catastrophe."

"I think OPEC will cut production," said Ray Holloway, director general of the Petrol Retailers Association.

"That and the fall in sterling means that forecourt prices could start rising in November and will remain high until the end of the year."

Having hit $147 a barrel in July, oil has been trading at less than $65 a barrel as demand has fallen amid fears of a global recession. Iran - one of the biggest OPEC producers - has already called for output to be slashed by two million barrels per day as they want the cost to rise to $100.

Mr Holloway's prediction for the OPEC meeting was endorsed by other analysts.

"From their point of view, OPEC members will have to increase prices," said Azfar Shaukat, director of oil and gas at consultants, Mott MacDonald.

"The price of oil has come down to a level that is not sustainable, especially given that during the middle of the year people were committed to projects that needed high revenue.

"We will see an increase and if I was to put my finger into the air, I would suspect it would be a figure of $75 to $80 a barrel.

"But it is a difficult market now and people don't want to be seen to be profiteering."

Mr Shaukat also believed that the prices could go even higher next year, with oil prices approaching $100 a barrel in the spring.

A similar view was expressed by David Smith, an analyst with Celerant Consulting.

"I am surprised that the Saudis haven't intervened more actively already," he said.

"It is pretty certain that they will cut production as they have enjoyed the benefit of high oil prices for some time.

"The more hawkish members will be determined to get prices up and I think many would be comfortable with prices at around $80 a barrel."

"But in the end you can't beat market forces, even though if there is some sabre-rattling, it will have an impact."

The only factor which could tie OPEC's hands is the fear that demand for oil would slump if it forces up the price too high.

At the same time petrol prices could also be forced up by the collapse of sterling against the dollar, which is the currency in which oil is traded.

This is not only bad news for the motorist, but the economy as a whole.

More costly fuel also pushes up the price of delivering goods to shops and supermarkets, which will add to inflation.

Despite accusations that retailers have been slow to pass on the full amount of recent price falls to motorists, the forecourt war has seen Sainsbury's announcing another cut, bringing petrol down to 94.9 pence, the same price as ASDA.

In addition ASDA promised that it would hold petrol down irrespective of the outcome of the OPEC meeting in Vienna.

But this could be only short term relief for motorists, especially with growing fears that the Government could also be ready to impose the delayed two pence a litre increase in the fuel levy in April.

In July Alistair Darling, the Chancellor, bowed to pressure from motoring groups shelved the rise due to come into force at the start of this month.

But the collapse in oil prices has cost the Treasury dear in recent months.

Having enjoyed a 2.5 billion windfall in the first half of the year, when oil prices soared above the $84 a barrel it budgeted for, the slump means that revenue is now less than it predicted.

Motoring groups fear that this and falling pump prices may make the temptation to impose the levy irresistible.

The world is running out of oil....not.

smiler o---------'Over the last month motorists have benefited from the slump in world oil prices, following pressure from Gordon Brown on retailers to pass on savings to their customers'.

It was inevitable that petrol prices were going to fall as the ppb fell, Gordon Brown new this as did my aunt Muriel (92), he was trying to get the credit for it, another cheap shot from this shrewd cookie who sold our gold at the bottom, put us all in hock, reneged on his promise of a referendum, sold out to europe and shrewdly paid 100 for a haircut.
2517

Aye ;) , out of Interest what is the price down in sunny Cornwall, its 98/97 ish this End

NORTH WEST LONDON 98.9 TO 101.9P

OCTOBER 27, 2008 OPEC Cut to Be Felt Eventually

The Organization of Petroleum Exporting Countries' move to pump less oil in the presence of shaky demand growth will result in higher prices -- eventually.

For now, the cartel's decision Friday to trim 1.5 million barrels a day from its output target won't put the brakes on oil prices' nose dive, analysts said. The reasons have to do with oil-supply dynamics and global financial markets.

smiler o--------sorry for the delay in responding but not been near a petrol station 'till today, in not so sunny Cornwall (just) 99.9 & 102.9, robbin' b's, but just across the border in Devon 94.9.
2517

Thanks 2517, and yes they are : )

Oil falls below $65 on US contraction
By STEPHEN WRIGHT 3 hours ago

BANGKOK, Thailand (AP) Oil prices slipped below $65 a barrel in Asia Friday, extending declines after data showed the U.S. economy contracted in the latest quarter, reinforcing expectations of a prolonged slump in demand.

Light, sweet crude for December delivery was down $1.44 to $64.52 a barrel in electronic trading on the New York Mercantile Exchange by midmorning in Singapore. The contract overnight fell $1.54 to settle at $65.96. Oil prices have fallen about 55 percent since peaking above $147 a barrel in mid-July.

U.S. gross domestic product, the broadest barometer of a nation's economic health, shrank at a 0.3 percent annual rate in the July-September quarter, the Commerce Department said overnight. It marked the worst showing for the world's largest economy since it contracted at a 1.4 percent pace in the third quarter of 2001.

The negative cue provided by the U.S. data continued into Asian trade, compounding the pressure from a generally strong dollar, said David Moore, commodity strategist with Commonwealth Bank of Australia in Sydney.

Investors often buy commodities such as crude oil as an inflation hedge when the dollar weakens and sell those investments when the greenback rises. Oil investors have also been tracking equity indexes as a barometer of global economic health.

The euro eased to $1.2833 from $1.3181 in late Asian trade Thursday. The region's stock markets were mixed after a blistering rally the previous day with Hong Kong's Hang Seng index down 1.8 percent and South Korea's benchmark index up 1.5 percent.

"The dollar has been relatively firm and that has taken some of the edge off the market. There's also the other issues that have been in the market for a while such as worries about demand and consumption patterns," Moore said.

"A further fall in the oil price cannot be ruled out. It is difficult to predict where the bottom could be," he added. "An important factor over the next few months will be whether OPEC can achieve its output cuts. If it can that will certainly tighten market conditions."

Last week, the Organization of Petroleum Exporting Countries announced plans to cut 1.5 million barrels of production per day at an extraordinary meeting in Vienna called to address plummeting prices.

Venezuela's Oil Minister Rafael Ramirez says that OPEC, which controls about 40 percent of world crude oil production, will need to cut production at least another 1 million barrels per day to boost falling prices.

In other Nymex trading, heating oil fell 2.96 cents to $1.9545 a gallon and natural gas for December delivery was down 5.9 cents at $6.37 per 1,000 cubic feet.

In London, December Brent crude fell $1.41 to $62.30 a barrel on the ICE Futures exchange